A coalition of community organisations has called on the Federal Government to immediately introduce legislation to cap costs on payday loans and consumer leases - expensive financial products that target people on low incomes.
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The coalition will also encourage Parliamentarians to support the No Interest Loan Scheme (NILS), which offers a fair and affordable, not-for-profit alternative.
The Josephite Foundation’s program, Cowra No Interest Loans (NILS), sees the financial harm caused by ‘rent to buy’ deals on a regular basis in Cowra.
Debbie Butwell, the Coordinator of Cowra NILS, said payday loans and consumer leases, often called ‘rent to buy’ deals, are promoted as an easy way to purchase household items and pay for other expenses, but typically make someone’s financial situation worse.
“Most rental contracts will see you pay around three times more than a product’s retail price, while payday loans have huge interest rates and crippling default and late payment fees,” said Mrs Butwell.
“The sad thing is that these companies target people on low incomes – those in our community who can least afford to be paying a premium.”
On November 28 last year, the Federal Government agreed to introduce legislation that would:
Cap consumer lease fees at 4 per cent of the Base Price of the goods per month, for a maximum of 48 months;
Cap payday loan and consumer lease repayments to 10 per cent of the consumer’s net income;
Require equal repayments over the life of a payday loan;
Prohibit monthly fees if a payday loan is repaid early and’
Ban unsolicited offers of payday loans to current or previous customers.
Mrs Butwell said the No Interest Loan Scheme (NILS), offered locally by the Josephite Foundation, was a better way to pay for furniture, whitegoods, computers and medical and dental services.
“NILS provides safe, fair and affordable loans of up to $1,000 to pay for essential goods and services,” Ms Butwell said.
“If you’re thinking of renting or using a payday loan, think twice and drop by the Neighbourhood Centre on Tuesday or Wednesday to see if you’re eligible for NILS.
If you live in Canowindra or Grenfell and cannot easily drop into the Centre, call Debbie on Tuesday or Wednesday on 63401100.
“With NILS you’ll only ever repay the amount you borrowed, not a cent more.” Mrs Butwell said.
